As President Biden begins his term in office, many manufacturers are anxious to learn how his Administration’s policies could affect the industry, especially as the COVID-19 pandemic continues. While we have discussed potential tax policies that the Administration would like to pass, manufacturers know that other key policies could affect their businesses throughout the Administration’s term. Consider three ways that the Biden Administration’s policies could affect manufacturers:
- Increasing minimum wage.
- Support for “Made in America”.
- Another round, or rounds, of stimulus support.
The Biden administration supports increasing the Federal minimum wage to at least $15 per hour. The President indicated that “no one working forty hours a week should still be below the poverty line”. While this plan could support many who are struggling at their current wages, opponents note that a wage increase of this significance could lead to higher unemployment levels and/or higher prices for consumers.
Manufacturing executives likely have two key concerns: first, how an increased minimum wage would affect the availability of laborers and second, how the policy change could affect their costs. Manufacturers have struggled to hire production workers in recent years, despite industry employment declining by 543,000 since February, according to the December 2020 Bureau of Labor Statistics Report. In addition, the report indicates that production workers earn an average of $23.12 per hour, although this average is expected to rise if an increased minimum wage is passed. As manufacturers continue to seek qualified production workers, their challenges may grow as labor-related cost pressures affect their businesses.
The Biden Administration believes in the importance of domestic manufacturing, noting that “U.S. manufacturing was the Arsenal of Democracy in World War II, and must be part of the Arsenal of American Prosperity today, helping fuel an economic recovery for working families.” His “Made in America” campaign indicates that the U.S. must "make smart investments in manufacturing and technology, give our workers and companies the tools they need to compete, use taxpayer dollars to buy American and spark American innovation, stand up to the Chinese government’s abuses, insist on fair trade, and extend opportunity to all Americans, many of the products that are being made abroad could be made here today.”
The Biden Administration can build on onshoring momentum created by tariffs and foreign policy by supporting more investment in workforce development, research and development, and domestic procurement as indicated in his campaign plan.
The COVID-19 pandemic has led to several rounds of relief or stimulus support for both individuals and businesses. Programs including the Paycheck Protection Program, COVID-19 sick and expanded family medical leave, Employee Retention Credit, and Economic Injury Disaster Loan have been used by manufacturers and provided significant relief during the ongoing crisis. President Biden has proposed additional COVID-19 relief, which would include support for small businesses that could continue to benefit manufacturers. While details of the proposed package remain sparse, it is expected that grant and loan programs may be included.
Additional relief would require Congressional approval, which could be a hurdle. The most recently passed package, which was included in the Consolidated Appropriations Act, 2021, came nine months after the CARES Act, which was the last significant stimulus package passed by Congress. Additionally, manufacturers will need to closely review eligibility criteria for any programs passed, as Congress’s most recent efforts focus only on the smallest and most hard-hit businesses.
To discuss your business or the impact the Biden Administration may have on it, please contact a member of HBK Manufacturing Solutions, a team of professionals dedicated to manufacturing clients. Team members can be reached directly or by calling 330-758-8613 or emailing email@example.com.